Complete the Budget in a Service Company (Cash Budget) assignment. Please use the template provided below.
The document must have the complete budget and show the entire process along with an explanation.
Add a brief explanation of the budget just like what you should do if you were in a meeting with senior management and you were the accountant who was tasked with presenting the budget. Put that explanation on the page below the budget that you have prepared.
Hint: The budget should start with the January beginning balance and the February ending balance should also be the ending balance for the two months combined column.
Budget in Service Company (Cash Budget)
Edge Soccer Program (Edge) began the year with a cash balance of $10,500. The budget forecasts that collections from customers owed to the company will be $11,000 in January and $15,200 in February. The soccer program is also supposed to receive $8,500 in January on a note receivable from a soccer club that owes Edge for training.
Edge plans to purchase soccer equipment in January and February with cash. The budgeted amounts of the purchases are $15,600 in January and $14,800 in February. Operating costs for the business is $2900 per month.
Edge must maintain a minimum cash balance of $10,000 in their bank account at all times. If the amount in the bank account falls below $10,000, then bank extends credit to Edge immediately in multiples of $1000. Edge pays back any amounts borrowed each quarter in payments of $2000 plus 4% interest. The first payment occurs three (3) months after the bank has extended edge credit.
Requirement
Prepare a cash budget for January and February.
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Sheet1
| Formulas included. Enter amounts in highlighted areas to complete the budget | ||||
| Edge Soccer Programs | ||||
| Cash Budget | ||||
| For the Two Months Ended February 28 | ||||
| January | February | Total | ||
| Beginning cash balance | $ – 0 | $ – 0 | ||
| Cash receipts from customers | $ – 0 | $ – 0 | ||
| Collection of note receivable | $ – 0 | |||
| Cash available | $ – 0 | $ – 0 | $ – 0 | |
| Cash payments: | ||||
| Equipment purchases | $ – 0 | |||
| Selling and administrative expenses | $ – 0 | |||
| Total cash payments | $ – 0 | $ – 0 | $ – 0 | |
| Ending cash balance before financing | $ – 0 | $ – 0 | $ – 0 | |
| Minimum cash balance desired | $ – 0 | $ – 0 | ||
| Projected cash excess (deficiency) | $ – 0 | $ – 0 | $ – 0 | |
| Financing: | ||||
| Borrowing | $ – 0 | |||
| Total effects of financing | $ – 0 | $ – 0 | $ – 0 | |
| Ending cash balance | $ – 0 | $ – 0 | $ – 0 | |